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HomeMy WebLinkAbout01/09/91 MINUTES RA JOINT158 Bakersfield, California, January 9, 1991 Minutes of the Special Joint Meeting of the Council of the City of Bakersfield and the Central District Development Agency of the City of Bakersfield, California, held in the Council Chambers of City Hall, 1501 Truxtun Avenue, at 5:15 p.m., January 9, 1991. The meeting was called to order by Mayor Medders. Mayor Medders announced that Councilmember Edwards was ill and will not be attending either the Workshop, Closed Session or Regular Meeting of the City Council this evening. City Clerk Williams called the roll of the City Council as follows: Present: Absent: Councilmembers DeMond, Brunni, Peterson (seated at 5:25), McDermott, Salvaggio Councilmembers Edwards, Smith City Clerk Williams called the roll of the Central District Development Agency as follows: Present: Absent: Agency Members Rubin, Ruddell, Araujo, Dunn (seated at 5:20), Paynter Agency Member Sceales CITY COUNCIL/CDDA JOINT WORKSHOP Economic Development Director Wager gave an oral presentation regarding the status of the Central District Development Agency, as follows: In 1986, the City Council delegated the responsibility for the implementation of the Redevelopment Plan to the Central District Development Agency. The creation of the CDDA was, given the time, the most effective way to facilitate the revitalization of the Downtown. With this formation, the Agency inherited two major projects: the need to resolve a major lawsuit, as well as assuming the financial obligations previously incurred. Responding to that challenge, the Agency first addressed the lawsuit which, after considerable discussion, was settled. As is well-known, the two projects the Agency was entrusted with has met with some difficulties. Lastly, the Agency has continued to struggle to meet its financial obligations while still trying to implement the revitalization of the Downtown. In regards to the two projects the Agency was involved in, the Agency has experienced mixed results. The Hotel Project came to a halt largely because of the impending failure of what, at the time, was considered to be one of the most vigorous savings and loan institutions. The Agency has fared remarkably well since the shutdown by prevailing in a number of legal actions. 1 5.9 Bakersfield, California, January 9, 1991 - Page 2 The conclusion of those actions has resulted in the Agency having clear title to land and improvements whose value approximate $6,000,000. This has not come about without cost. Originally, the Agency invested approximately $2,000,000 in land acquisition. Of late, the Agency agreed to utilize an additional $2,000,000 to resolve nearly $5,000,000 in claims filed against the Project. Adding to the Agency's frustration, nearly $400,000 in legal costs have been incurred by the Agency in asserting its position as a wronged party and resolving the issues of claims filed by numerous parties. Fiscal Year 1990-91 holds out a prospect for improvement on two counts: the first being a substantial reduction in legal cost as a result of the Hotel settlement; perhaps, more importantly, the selection of a development entity to bring about the completion of the Hotel. Recently, the Developer has completed some in-house studies, and negotiations should begin in earnest this month. In fact, as of this morning, an appointment was set for the Developer for next week. Staff remains cautiously optimistic that an accord will be reached between the Developer and the Agency. If an accord is reached, construction could resume by Summer, 1991. In regards to the second project, the Agency experienced mixed success here. The City Center Project was indeed completed on time and per the Owner Participation Agreement. Unfortunately, the Developer experienced some financial difficulties, and the Lender took back the building. The Lender, U.S. Bancorp, is in the process of resolving the final outstanding issues with both the City and the Agency. Assuming the responsibility to carry out these projects to completion has also meant inheriting the fiscal constraints, as well. For some time now, there has been a general awareness that the Agency would eventually face a cash flow shortage. Efforts to hold off that point in time have, so far, succeeded. The majority of the Agency's revenue is committed to debt service. It is anticipated that the Agency will continue to be able to meet its debt service needs. Among those debts being repaid are the following: Principal and interest payment to the City Sewer Fund - an annual payment of $169,000, which expires in 2000. [6O Bakersfield, California, January 9, 1991 - Page 3 Principal and interest payment for a City-owned parcel at the Hotel site - annual payment of $59,000, which expires in 1998. Principal and interest payment to Wells Fargo - an annual payment of $350,000, which expires in 1999. Principal and interest payment for a Tax Allocation Bond - annual payment of $604,000, which expires in 2008. Principal and interest payment for parking structure at the Bank of America site - annual payment of $130,000, which expires in 1999. Total Debt Service $1,300,000. Total Tax Increment Revenue - $1,400,000. On a more positive note, in the last year we have seen some encouraging signs that the Downtown has stabilized. In fact, there are indications of a mild resurgence in the Downtown area. We distributed an article to the Agency at its Monday meeting, written by Joe Stevenson, and included in the Council's folder tonight. Other things that we've seen happen in the Downtown, previously unoccupied buildings have been purchased and have been put to use: The Pavilion (formerly the Brock's building) and American Way (formerly the J C Penney building); the Kress Building, the new owners have created new interest in the available space, and much of the building has been leased. Past difficulties with projects and critical reports from the Grand Jury have had a positive impact. The Agency's philosophy on granting assistance is now predicated on post facto assistance, meaning only after a project is in place and generating tax increment is the assistance granted to the developer. To an extent, this is necessary due to the fiscal constraints that the Agency is faced with, but the Agency also feels it's essential in order to reduce all risk to the extent that it is feasible. Some of the more recent example of that: Bakersfield, California, January 9, 1991 - Page 4 Banducci-Walker, where inducements were offered which would cause the development of 4.5 Million Dollars of improvements within the next 5 years. Should that take place, then the Agency would incur that obligation and pay the City out of the tax increment generated. The Tegeler Hotel Project - assistance from the Agency will be granted only upon completion of the Project. And thirdly, we're in the initial stages of negotiations with a medium-sized engineering firm for its office location in the Project Area. Again, assistance for off-site improvements would come only after the project is completed and generating tax increment, and the assistance would be limited to a percentage of that tax increment to be generated. The Agency has been instrumental in the development of submittal guidelines, which the Council will find in their packets. Urban Design Guidelines - which were recently adopted by the Redevelopment Agency; Revised parking requirements for the Downtown area contained within the newly-adopted Parking Ordinance; and The final stages of creating a Master Tree Plan for the Downtown. Finally, through an Agency-appointed citizen panel representing many divergent interests, a draft revision of the Redevelopment Element has been completed. The Executive Director has established an administrative policy that now requires a review and sign-off of any CDDA agreement by the City Attorney's Office, Finance Department, and the Economic and Community Development Department prior to any legislative action. Also, at his direction, an Administrative Work Plan for Fiscal Year 1990-91 has been prepared in order to better guide staff resources, and I believe the Council will find that in its packets, and copies of that have been distributed to the Agency this evening. Bakersfield, California, January 9, 1991 - Page 5 Work is also under way by both the Finance, and Economic and Community Development Departments to address some medium-term solutions to the Agency's financial difficulties. This includes the disposition of Agency-owned property. Lastly, efforts have already been initiated to reduce operating costs by not filling a position that has become vacant and the transfer of personnel from Redevelopment to Planning. Agency Member Araujo made a brief statement regarding the need for better communication between the Agency and the Council, as follows: In order for the Council to be kept abreast of the Agency's progress and potential problems, a closer working relationship should be arranged. Regularly scheduled meetings between the Agency and the Council, open to the public, would be the most straightforward way to accomplish this. Communication between the Agency and the Council should not be solely the responsibility of staff. With regard to the need for open, two-way communication between the Agency and the public, regularly scheduled Agency Workshops, open to the public, would do much to eliminate misunderstandings. For example, Downtown business people often ask questions about such matters as the current disposition of funds which were once to be allocated for certain programs later suspended or eliminated, such as the highly-successful Facade Improvement Program, which is currently on hold. Councilmember McDermott stated that this Workshop was set up at the direction of Councilmember Edwards and, although Councilmember Edwards was ill this evening, staff has been asked to tape this Workshop in the event he wishes to listen to it at a later date. Councilmember McDermott further stated that, in the past, Council had asked the Urban Development Committee to stay in communication with the CDDA by having regularly-scheduled luncheons and requested the Chairman of that Committee check into resuming the quarterly luncheons. Agency Chairperson Rubin stated he wished to echo the comments regarding the need for closer communication. He further stated it is an excellent idea to resuscitate the luncheons, and he will be happy to participate and felt all the Agency Members would, as well. Councilmember Salvaggio stated he would like to see the Facade Improvement Program back on track. Bakersfield, California, January 9, 1991 - Page 6 Councilmember DeMond urged staff to offer any existing funds, or when funds do become available, to the community for facade improvement. Councilmember DeMond requested staff determine and advise when the Facade Improvement Program would become available. ADJOURNMENT There being no further business to come before the Council and the Central District Development Agency, Mayor Medders adjourned the Special Joint Meeting, Council went into Closed Session, and the Central District Development Agency went into its Special Meeting at 5:45 p.m. CHAIRPERSON of the Central District Development Agency of the City of Bakersfield ATTEST: SECRETARY of the Central District Development Agency of the City of Bakersfield ndw